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WestRock (WRK) to Report Q2 Earnings: What's in the Offing?

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WestRock Company (WRK - Free Report) is scheduled to report second-quarter fiscal 2021 results (ended as of Mar 31, 2021) on May 5, before the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $4.5 billion, suggesting growth of 1.14% from the year-ago quarter. The same for earnings per share stands at 62 cents, indicating a year-over-year drop of 7.5%. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings moved south over the past 30 days.

Q1 Performance

WestRock’s adjusted earnings per share and revenues both beat the Zacks Consensus Estimate in the prior quarter. While the bottom-line figure increased year over year, the top line declined. Notably, the company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 26.2%.

Key Factors to Note

Packaging products are essential for the distribution of food, beverage and pharmaceutical products. Further, the pandemic-induced stay-at-home orders and restrictions worldwide have fueled demand for online grocery, beverage and pharmaceuticals delivery services, which in turn is driving e-commerce growth. Consequently, the company’s Consumer Packaging segment is anticipated to have benefited during the fiscal second quarter from elevated demand for the packaging of food, beverages, household cleaning and liquid packaging.

However, waning demand across few of WestRock’s businesses due to the coronavirus crisis might have weighed on the company’s performance. Demand in food service has been impacted by uncertainty in timing of reopening of restaurants, schools and other services. Commercial print demand has also been strained due to limited public events, and reduced retail and direct mail advertising. Luxury goods have also been hit hard. These factors are likely to have dented the company’s fiscal second-quarter performance. Also, maintenance downtime across the North American Corrugated Packaging and Consumer Packaging segment might have unfavorably impacted the company during the fiscal second quarter.

WestRock acquired KapStone Paper and Packaging Corp in 2019, with the integration on track. The buyout has helped the company cement its presence in the Western United States. Further, the company continues to boost its North American corrugated packaging business margins. These moves are likely to have contributed to its performance during the quarter in discussion.  In addition, productivity, performance-improvement programs across its manufacturing footprint and cost savings are anticipated to have aided the company’s performance during the quarter under review.

The Zacks Consensus Estimate for the Consumer Packaging segment’s quarterly revenues is pegged at $1,632 million, suggesting growth of 0.9% from the prior-year quarter. The segment’s adjusted EBITDA is estimated to be down 2.7% year over year to $216 million.

For the Corrugated Packaging segment revenues, the Zacks Consensus Estimate is pinned at $2,891 million, indicating growth of 0.3% from year-ago quarter. Improved box shipment and increased demand from distribution, industrial and agricultural customers are likely to have aided the segment. The segment’s adjusted EBITDA is likely to dip 4.8% year over year to $478 million.

WestRock Company Price and EPS Surprise

WestRock Company Price and EPS Surprise

WestRock Company price-eps-surprise | WestRock Company Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for WestRock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat but that is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for WestRock is -9.43%.

Zacks Rank: WestRock currently carries a Zacks Rank of 3.

Share Price Performances

WestRock’s shares have gained 81.7% over the past year compared with the industry’s growth of 79.2%.


 

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that these have the right combination of elements to post earnings beat this quarter:

Westlake Chemical Corporation (WLK - Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +0.64%, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge Limited (BG - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +4.99%.

The Scotts Miracle-Gro Company (SMG - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank of 3 currently.

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